So, I’ve had the pleasure of working with a buyer wanting to get a house in some of Lexington’s finest older neighborhoods….Chevy Chase and Ashland Park. Don’t remember which house it was, but the buyer says to me “How come I’ve seen nicer houses sell for less and lesser houses sell for more?”
Good question. Got me thinking about a way to explain it to him without sounding like a beauty pagent contestant struggling to answer a complex question.
From the get go, any house in any neighorhood has the usual factors like size, location & condition that impact value. Usually, in an area less than, say, 40 years old, it just comes down to those variables. For houses that age or less, most are similar in their floor plan since builders were buying their plans out of a book and building multiple versions of the same house. Also, you don’t see many houses that have had major additions, so it typically just comes down to if a house has been updated or not. Let’s take Beaumont as an example. The whole neighborhood is pretty much houses from $350k to over a million, but most are $450-600k and are about the same age and about the same in function and about the same size. Finding equal comps is fairly easy. Once you know the hiarchy of streets, you can just cut and paste for the differences in square footage and quality of finishes. Pretty simple. Pretty logical.
Once you step into most older neighborhoods, I mean ones build before 1940 or so, you start to rely more on emotion rather than just logic when determining value. Sure, you’ve got the same variables of location, size and condition, but you also have function (since not all the original floor plans really work today), expandability (since older houses in these Lexington neighborhoods are smallish), the quality/condition of any additions or modifications to the floor plan, and vibe.
In my opinion, vibe is the most important one in determining value in older houses. People want an old house to feel a certain way. When I ask buyers of newer homes what they liked about a certain house, they usually list features, like granite, lot size, closet size, etc. When I ask the same for old house buyers, they usually don’t start with the list of features, they say the house has charm, or character. Then their list of features usally starts with something like the look of the house, the trees, or what they could walk to. It’s a whole different approach to value. That is why you sometimes see two houses the same size with the same features sell for two far apart prices. One had the right vibe and the other one didn’t.
Since I fumbled around and said “Um” about 100 times when asked the above question, this post is dedicated to Steve. Thanks for asking it and causing me to write this post so the next time I get asked that question, I’ll be better prepared to answer.